Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.

Q3 2013 presentation final


Published on

Published in: Business, Technology
  • Be the first to comment

  • Be the first to like this

Q3 2013 presentation final

  1. 1. Third Quarter 2013 Results November 6, 2013
  2. 2. Cautionary Statement This presentation may contain “forward-looking” statements within the meaning of Canadian securities legislation and the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements relate to future events or the anticipated performance of the Company and reflect management’s expectations or beliefs regarding such future events and anticipated performance. In certain cases, forward-looking statements can be identified by the use of words such as “plans”, “expects”, “is expected”, “budget”, “scheduled”, ”estimates”, ”forecasts”, ”intends”, ”anticipates” or “believes”, or variations of such words and phrases or statements that certain actions, events or results “may”, ”could”, “would”, ”might”, or “will be taken”, “occur” or “be achieved”, or the negative of these words or comparable terminology. By their very nature forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual performance of the Company to be materially different from any anticipated performance expressed or implied by the forward-looking statements. Such factors include various risks related to the Company’s operations, including, without limitation, fluctuations in spot and forward markets for gold, silver and other metals, fluctuations in currency markets, changes in national and local governments in Mexico and the speculative nature of mineral exploration and development, risks associated with obtaining necessary exploitation and environmental licenses and permits, and the presence of laws that may impose restrictions on mining. A complete list of risk factors are described in the Company’s annual information form and will be detailed from time to time in the Company’s continuous disclosure, all of which are, or will be available, for review on SEDAR at This presentation uses the terms “measured resources”, “indicated resources” and “inferred resources”. The Company advises readers that although these terms are recognized and required by Canadian regulations (under National Instrument 43-101 Standards of Disclosure for Mineral Projects (“NI 43-101”), the United States Securities and Exchange Commission does not recognize them. Readers are cautioned not to assume that any part or all of the mineral deposits in these categories will ever be converted in to reserves. In addition, “inferred resources” have a great amount of uncertainty as to their existence, and economic and legal feasibility. It cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded to a higher category. Under Canadian rules, estimates of inferred mineral resources may not form the basis of feasibility or pre-feasibility studies, or economic studies, except for a Preliminary Assessment as defined under NI43-101. Investors are cautioned not to assume that part or all of an inferred resource exists, or is economically or legally mineable. Although the Company has attempted to identify important factors that could cause actual performance to differ materially from that described in forward-looking statements, there may be other factors that cause its performance not to be as anticipated. The Company neither intends nor assumes any obligation to update these forward-looking statements or information to reflect changes in assumptions or circumstances other than required by applicable law. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those currently anticipated. Accordingly, readers should not place undue reliance on forward-looking statements. Unless otherwise indicated, all dollar values herein are in US$. 2
  3. 3. Management Participants Joseph F. Conway President & Chief Executive Officer Renaud Adams Chief Operating Officer David Blaiklock Chief Financial Officer 3
  4. 4. A Record Producing Quarter o Record Gold and Silver Production o Low Cash Costs and All-in Sustaining Costs o Production Guidance Increased o Highest Silver Sales at Spot Prices o Robust Earnings and Cash Flow o Balance Sheet Remains Strong o Exploration Success Continues o Capital Programs On Track Subsequent to Quarter o Cerro del Gallo Ownership Consolidated 4
  5. 5. Operating Results – Record Production Q3 2013 Q3 2012 Mill Throughput 1 2,172 (tonnes per day) Gold equivalent production 41,998 41,500 31,791 Gold grade (grams per tonne) Silver grade (grams per tonne) 26,500 3.40 21,500 265 (million ounces) 1.14 5.08 Silver production 18,892 1.62 (ounces) 210 16,500 974 1,279 11,500 3 ($ per gold ounce) Cash cost 25,582 +64% 36,500 Gold production All-in Sustaining Cash Costs (AuEq ounces) 1,934 2 (gold equivalent ounces) Production 3 ($ per AuEq ounce) 516 699 3 Cash cost – by-product ($ per gold ounce) See final slide for footnotes. 31,500 6,500 1,500 252 363 Q3 2012 Q3 2013 5
  6. 6. Financial Results (US$ thousands, except per share amounts) Q3 2013 Q3 2012 Revenues 53,793 38,277 Earnings from Mine Operations 22,960 13,087 Net income 10,080 11,586 0.09 Adjusted EPS 4 ($ per share) $0.10 0.12 EPS ($ per share) 4 Adjusted net income +200% $0.08 $0.06 $0.04 10,959 2,634 0.09 0.03 20,926 15,448 0.18 0.17 4 Adjusted EPS ($ per share) Operating cash flows before changes in working capital CFPS ($ per share) See final slide for footnotes. $0.02 $Q3 2012 Q3 2013 6
  7. 7. Outlook for 2013 Revised Upward Previous Outlook 2013 Revised Outlook 2013 Gold equivalent production 2 125,000-135,000 Silver production 5 (million ounces) Silver sales at spot 5 (thousand ounces) All-in Sustaining Cash Costs 3 ($ per gold ounce) Cash cost 3 ($ per gold equivalent ounce) 3 Cash cost – by-product ($ per gold ounce) See final slide for footnotes. 5.6-6.0 850-950 (ounces) 105,000-110,000 5.6-6.0 Gold production 135,000-140,000 95,000-105,000 (gold equivalent ounces) 999,046 $1,050-1,150 $1,050-1,150 $620-640 $620-640 $410-430 $410-430 7
  8. 8. Our Focus 1. Strong balance sheet Measured growth 3. Disciplined cost management 4. Low-risk jurisdictions 5. 400-500 Future Acquisitions Cerro del Gallo San Dimas Expansion 250-300 Responsible mining San Dimas 160-200 150-170 135-140 (Thousand Gold Equivalent Ounces) 2. TARGETED GROWTH PROFILE6,7 111 2012 2013E 2014E 2015E 2016E See final slide for footnotes. How we are building value in Primero 8
  9. 9. Strong Financial Position $126M STRONG Cash Balance $90M o 8 SIGNIFICANT Operating Cash Flow $32M Provides funding for: Expansion of San Dimas o Reserve replacement o Development of Cerro Del Gallo 9 CONSERVATIVE Debt Level See final slide for footnotes. Funds planned growth with no shareholder dilution 9
  10. 10. Asset Overview o o o Based in historical mining districts with histories spanning hundreds of years With established infrastructure, skilled workforce and local suppliers Supported by local communities San Dimas Mine Gold-Silver Mine Durango, Mexico 0 400 km Ventanas Property Cerro Del Gallo Project Exploration Property Durango, Mexico Gold-Silver-Copper Project Guanajuato, Mexico Located in proven and low-risk jurisdictions 10
  11. 11. Steady Growth Ahead DEVELOPMENT PHASE 2 POTENTIAL EXPANSION PHASE 1 EXPANSION PRODUCTION San Dimas Platform San Dimas 2,500 TPD San Dimas 3,000 TPD Cerro Del Gallo Targeting to double production by 2016 YE1 11
  12. 12. Flagship Asset – San Dimas Location Durango-Sinaloa State Border Ownership 100% Metals Gold & Silver Mining Underground cut & fill/longhole Acquired Long History of Reserve Replacement 2010 from Goldcorp Mineral Resources and Mineral Reserves (DECEMBER 31, 2012, MINERAL RESOURCES INCLUDE MINERAL RESERVES) CLASSIFICATION TONNAGE (M TONNES) GOLD GRADE (G/T) SILVER GRADE (G/ T) CONT. GOLD (K OUNCES) CONT. SILVER (M OUNCES) 4.5 267 660 39.4 Mineral Reserves Probable 4.6 Mineral Resources Indicated 3.7 6.5 389 780 46.9 Inferred 6.1 3.9 327 762 64.6 District Produced 11M oz Gold, 600M oz Silver 12
  13. 13. Low Cost Structure Controlling Unit Costs ($/tonne) 100 $99 $98 2011 2012 80 Results of strategic initiatives begun in 2012: $108 60 40   Optimization program improves throughput Long-hole mining decreases dilution 20 0 Low All-In Sustaining Costs ($/ounce)  Training improves productivity and quality control YTD 2013 Estimated Industry Average10 1,200 $1,134 1,000 800 $1,050$1,150 2012 2013 E $968 600 400 200 See final slide for footnotes. - 2011 Below industry average costs 13
  14. 14. San Dimas Expansion11 ATTRACTIVE IRR AND PAYBACK PERIOD o o o On-track for 2,500 TPD in Q1 2014 Total capital expenditure of ~$16.5M Continuing to assess future expansion to 3,000 TPD decision by mid 2014 See final slide for footnotes. Increasing capacity to 2,500 TPD 14
  15. 15. SAN DIMAS Strategic Underground Development o Tunnels joining Sinaloa Graben and Central Block being completed o Lower level tunnel commenced, expected to be completed by end of 2015 o 19,000 metres of development in 2013 Sinaloa Graben Central Block 2013 EXPLORATION Mined 2002-Current Sinaloa Graben Tunnel DELINEATION Tunnels 2013 Planned Tunnels Future Planned Tunnels Four new high-grade veins in Sinaloa Graben 15
  16. 16. SAN DIMAS Focused Exploration o o o o o $15.4 million exploration program 22,500 hectare package 89,000 metres of drilling:  48,000 metres delineation drilling  41,000 metres exploration drilling, plus 2,000 metres of exploration drifting Completed 75,000 metres to date at 30% lower costs than 2012 Increased drilling by 15,000 metres for same budget 0 1 Adding to 0.7M oz gold reserves 2 km 16
  17. 17. SAN DIMAS New Mineralization Close to Infrastructure o Alexa and Victoria discovered in early 2012, included in 2012 year-end Reserves o Alexa and Victoria already contributed 8% of the tonnes mined in 2013 o 2013 drilling has expanded the known mineralization in both veins Alexa Vein New veins discovered in 2012 and mined in 2013 17
  18. 18. CERRO DEL GALLO New Mine Development CERRO Guanajuato State Location: DEL GALLO INCREASES PRIMERO’SPRODUCTION BY 60%12 Ownership: 100% - Subject to agreement to acquire remaining 30.8% from Goldcorp closing Metals: Gold, silver & copper Mining: Open pit, heap leach, and/or conventional mill Excellent Infrastructure: Active mining district, skilled local workforce, grid power, water, sealed roads, equipment suppliers and established transport routes Supportive Community: District has produced 1.14 billion ounces of silver and 6.5 million ounces of gold over its 450 year mining history See final slide for footnotes. Diversifies near-term production & doubles reserves to 1.4 million Au Oz2,12 18
  19. 19. CERRO DEL GALLO Solid Economics TECHNICAL DETAILS 7 (At $1,341 per ounce of gold, $25.58 per ounce of silver, $7,582 per tonne of copper) 12 Production Start End 2015 (Phase I Heap Leach) Proven and Probable Reserves 12 32.2 Mt @ 1.14 g/t AuEq or 1.2Moz (Phase I Heap Leach) Measured and Indicated Resources 12 (Phase I Heap Leach In-Pit Excluding Proven and Probable Reserves) 12 Production 94,600 AuEq. Oz (Phase I Average Annual) 13, 14 Cash cost $650-700 per ounce (Co-Product, Excluding Royalties) Heap Leach Grades Strip Ratio 47.9 Mt @ 1.06 g/t AuEq or 1.6Moz 15 0.7g/t Au, 14.8g/t Ag, 0.08% Cu 15 0.9:1 Phase I Mine Life 15 Capital Cost Estimate 7.2 years 13 2013E Capital Expenditures $165 million 13 $15 million See final slide for footnotes. Construction decision expected in Q4 2013 19
  20. 20. CERRO DEL GALLO Anticipated Production Profile Cerro Del Gallo Phase I Heap Leach Near Term Production Profile7,13 (Gold equivalent calculated at $1,341 per ounce of gold, $25.58 per ounce of silver, $7,582 per tonne of copper) 120 100 99 Gold Equivalent Ounces (000s) 99 87 80 60 95 99 87 59 55 40 20 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 See final slide for footnotes. Increases Production by 60%2 20
  21. 21. CERRO DEL GALLO Large Gold Domain o M&I Resources of 3.2Moz of Gold or 5.6Moz of Gold Equivalent 12,13 See final slide for footnotes. 21
  22. 22. CERRO DEL GALLO Exploration and Development Upside o 2013 $4 million exploration budget o First exploration activity since 2008 o 12,000 metre drill program for infill and condemnation drilling o Known mineralization outside the existing development plan o Current Focus on condemnation drilling, permitting, land acquisition and engineering update First Exploration Activity Since 2008 22
  23. 23. Corporate Activity Focused on Low-Risk Jurisdictions o o o Further diversify asset base Create a portfolio of early and advanced stage projects Focused on mining friendly regions of the Americas with established infrastructure: CANADA USA Grid Power, Water Access, Sealed Roads  Skilled local workforce  Local equipment suppliers  o o BRAZIL Targets of similar scale to San Dimas Remain opportunistic by utilizing strong balance sheet and cash flow Selective acquisition criteria Region of focus 23
  24. 24. Primero Opportunity o o o o Emerging mid-tier gold producer with portfolio of long-life and highgrade assets Track record of steady, dependable growth Low cost structure 100% Planned Growth 250,000 AuEq.oz1 by 2016 YE Strong cash flow and cash position funding expansion, exploration and new mine development Producing, profitable and growing 24
  25. 25. Appendices
  26. 26. SAN DIMAS Positive Created Positive LeverageSilver Leverage to to Silver Recent Tax Ruling Primero sells 50% of annual silver production above 3.5 million ounces at spot o Remainder sold at ~$4 per ounce under silver purchase agreement o Threshold commences August 6 to following August 5 o Threshold increases to 6.0 million ounces on August 6, 2014 o Expansion anticipated to generate meaningful silver spot sales post August 6, 2014 SILVER AS PERCENTAGE OF 2013E REVENUE Silver Gold 25% 75% 26
  27. 27. SAN DIMAS District Wide Exploration Potential West Block 2013 EXPLORATION San Antonio Mined 1987-2002 Sinaloa Graben Mined 2012-Current Central Block Mined 2002-Current Tayoltita Block Mined 1975-Current Arana Hanging Wall NE SW 3,000 m. 3,000 m. 2,000 m. 2013 EXPLORATION PROGRAM 2,000 m. DRILLING FOR EXTENSIONS OF KNOWN VEINS 1,000 m. 1,000 m. Source: San Dimas Geology Office LONGITUDINAL CROSS SECTION Mineralization – Ore Bodies Favorable Horizon Extension of the Favorable Horizon Potential Faults Intrusive 0 1 2 K I L O M E T E R S 27
  28. 28. CERRO DEL GALLO Cerro Del Gallo Development Plan 2013 Q3 Q4 2014 Q1 Q2 2015 Q3 Q4 Q1 Q2 2016 Q3 Q4 Q1 Q2 Basic Engineering Permitting/Land Acquisition Site Survey Leach Pad Design & Earth Works Infill Drilling and MET Tests Acid Generation Tests SART Optimization Procurement & Detailed Engineering Plant & Leach Pad Construction Commissioning Production Phase II Feasibility Study 28
  29. 29. SAN DIMAS Mineral Resources and Mineral Reserves (DECEMBER 31, 2012, MINERAL RESOURCES INCLUDE MINERAL RESERVES) TONNAGE (MILLION TONNES) GOLD GRADE (G/T) SILVER GRADE (G/ T) CONTAINED GOLD (000 OUNCES) CONTAINED SILVER (000 OUNCES) 4.579 4.5 267 660 39,377 Indicated 3.748 6.5 389 780 46,877 Inferred 6.144 3.9 327 762 64,637 CLASSIFICATION Mineral Reserves Probable Mineral Resources Notes to Mineral Reserve Statement: 1. Cutoff grade of 2.4 grams per tonne (”g/t”) gold equivalent (“AuEq”) based on total operating cost of US$104.73/t. Metal prices assumed are gold US$1,400 per troy ounce and silver US$25 per troy ounce. Silver supply contract obligations have been referenced in determining overall vein reserve estimate viability. 2. Processing recovery factors for gold and silver of 97% and 94% assumed. 3. Exchange rate assumed is 13 pesos/US$1.00. 4. The Mineral Reserve estimates were prepared by Mr. Herbert A. Smith P.Eng. of AMC Mining Consultants (Canada) Ltd. and a QP for the purposes of National Instrument 43-101 (“NI 43-101”). Notes to Mineral Resource Statement: 1. Mineral Resources are total and include those resources converted to Mineral Reserves. 2. A 2.0g/t Au Eq cutoff grade is applied and the AuEq is calculated at a gold price of US$1,625 per troy ounce and a silver price of US$25 per troy ounce. 3. A constant bulk density of 2.7 tonnes/m3 has been used. 4. The Mineral Resource estimates were prepared by Mr. Rodney Webster MAusIMM, MAIG and Mr. J. Morton Shannon P.Geo., both of AMC Mining Consultants (Canada) Ltd. and a QP for the purposes of NI 43-101. Additional exploration potential estimated at 6-10 million tonnes at grade ranges of 3-5 grams per tonne of gold and 200-400 grams per tonne of silver. It should be noted that these targets are conceptual in nature. There has been insufficient exploration to define an associated Mineral Resource and it is uncertain if further exploration will result in the target being delineated as a Mineral Resource. 29
  30. 30. CERRO DEL GALLO Reserves and In-Pit Resources1 Total Resources Within the Gold Domain2 Category Measured Indicated Measured & Indicated Inferred M Tonnes 129 80 209 20 Au (g/t) 0.54 0.38 0.48 0.3 Au (M ozs) 2.24 0.98 3.22 0.19 Ag (g/t) 12.0 8.0 11.0 7.0 Ag (M ozs) 49.8 20.6 70.3 4.5 Cu (%) 0.09 0.08 0.08 0.09 Cu (M lbs) 256.0 141.1 396.9 39.7 Au Eq (g/t) 0.94 0.69 0.83 0.59 AuEq (M oz) 3.91 1.77 5.58 0.38 1. “Technical Report First Stage Heap Leach Feasibility Study, Cerro del Gallo Gold Silver Project, Guanajuato, Mexico” June 2012 (“Feasibility Study”). Gold equivalent ounces calculated by Cerro Resources using gold, silver and copper prices of US$1,341/oz, US$25.58/oz and US$7,582/t respectively. 2. These resources are reported using internal cut-off grade of 0.2 g/tAu as per Feasibility Study, 2012 and Golder Associates Technical Report, 2008. Phase I Heap Leach In-Pit Proven and Probable Reserves3 Category Proven Probable Proven & Probable M Tonnes 28.2 4.0 32.2 Au (g/t) 0.71 0.54 0.69 Au (M ozs) 0.64 0.07 0.71 Ag (g/t) 15.1 13.2 14.8 Ag (M ozs) 13.7 1.7 15.3 Cu (%) 0.08 0.07 0.08 Cu (M lbs) 50.2 6.2 56.4 Au Eq (g/t) 1.15 0.93 1.14 AuEq (M oz) 1.05 0.12 1.18 Au Eq (g/t) 1.07 0.92 1.06 AuEq (M oz) 1.37 0.24 1.64 3. These reserves are reported using internal cut-off grades of 0.24 and 0.29 gAuEq/t for weathered and partially oxidized, respectively. In-Pit Resources (excluding Proven and Probable Reserves)4,5 Category Measured Indicated Measured & Indicated M Tonnes 39.9 8.0 47.9 Au (g/t) 0.61 0.55 0.60 Au (M ozs) 0.78 0.14 0.92 Ag (g/t) 13.8 11.0 13.3 Ag (M ozs) 17.71 2.83 20.55 Cu (%) 0.10 0.08 0.1 Cu (M lbs) 88.8 14.6 103.4 4. These resources are reported using internal cut-off grades of 0.24, 0.29, and 0.34 gAuEq/t for weathered, partially oxidized, and fresh material resp. 5. See note 7 in January 23, 2013 News Release “Primero achieves 2012 Guidance and Provides 2013 Outlook”. 30
  31. 31. Executive Management Joseph F. Conway | President & C.E.O. 1 o o Former CEO, President and Director of IAMGOLD from 2003 to 2010 Former President, CEO and Director of Repadre Capital from 1995 to 2003 Renaud Adams | C.O.O. o o o Former SVP, American Operations for IAMGOLD Former General Manager of Rosebel Gold Mine 2007 to 2010 Former General Manager El Toqui Mine in Chile and then the El Mochito Mine in Honduras David Blaiklock | C.F.O. Former controller IntraWest Previously controller for a number of public and private companies in real estate development o o Tamara Brown | VP, Investor Relations o Former Director Investor Relations for IAMGOLD; Partner of a Toronto based, boutique investment bank; Professional engineer in mining industry H. Maura Lendon | VP, Chief General Counsel and Corporate Secretary Former Senior Vice President, Chief Legal Officer and Corporate Secretary of HudBay Minerals Inc.; Chief Counsel Canada, Chief Privacy Officer Canada of AT&T o Gabriel Voicu | VP, Geology and Exploration 25 Years of mining experience, formerly held senior technical and exploration positions with Cambior and IAMGOLD o David Sandison | VP, Corporate Development Former VP, Corporate Development of Clarity Capital ; Director, Corporate Development Xstrata Zinc Canada ; Director Business Development, Noranda/Falconbridge; Former EVP, Noranda Chile o Louis Toner | VP, Project Development & Construction o Over 30 Years of Engineering and Construction experience, formerly held Senior Project Management roles with BBA Inc. and Lafarge Canada Inc. 31
  32. 32. Board of Directors Wade Nesmith | Chairman o o Founder of Primero Founding and current director of Silver Wheaton Joseph Conway | Director1 see Executive Management o o Director2,3,4,5 o o o Founder, CEO and Director Westport Innovations Director of Cummins Westport and Juniper Engines Grant Edey | Director 3,5 o o o President & CEO, Khan Resources Inc. Former Director of Breakwater Resources, former director of Queenstake Resources, Santa Cruz Gold Former CFO, IAMGOLD EVP, Corporate Development, Goldcorp Former CEO of Zincore Metals Inc. and Southwestern Resources Corp. Eduardo Luna | Director 1 o o VP, Strategy, Goldcorp Formerly with Wheaton River and Deloitte & Touche LLP Timo Jauristo | Director 2 o David Demers | Brad Marchant| Director 2,3 Rohan Hazelton | Director 1,5 Former EVP & President, Mexico. Former Chairman and CEO of Silver Wheaton, Executive VP of Goldcorp and Luismin S.A. de C.V. (San Dimas) and President of Mexican Mining Chamber and the Silver Institute Board Committees: 1.Health, Safety and Environment 2. Human Resources and Compensation 3. Governance and Nominating 4. Lead Director 5. Audit o Co-founder of Triton Mining Corporation Founder of BioteQ Environmental Technologies Inc. Robert Quartermain | Director 2,3 o o o Founder and President & CEO, Pretivm Resources Former President, Silver Standard Director of Vista Gold Corp. and Canplats Resources Michael Riley | Director 5 o o Chartered accountant with more than 26 years of accounting experience Chair of Primero Audit Committee, Chair of Audit Committee of B.C. Lottery Corporation and member of the Audit Committee of Canalaska Uranium Ltd. 32
  33. 33. Notes to Investors Regarding the Use of Resources This presentation has been prepared in accordance with the requirements of Canadian provincial securities laws which differ from the requirements of U.S. securities laws. Unless otherwise indicated, all mineral reserve and resource estimates included in this presentation have been prepared in accordance with Canadian National Instrument 43-101 Standards of Disclosure for Mineral Projects (“NI 43-101”) and the Canadian Institute of Mining, Metallurgy and Petroleum classification systems. NI 43-101 is a rule developed by the Canadian Securities Administrators that establishes standards for all public disclosure an issuer makes of scientific and technical information concerning mineral projects. These standards differ significantly from the requirements of the United States Securities and Exchange Commission (the “SEC”), and reserve and resource estimates disclosed in this presentation may not be comparable to similar information disclosed by U.S. companies. The mineral reserve estimates in this presentation have been calculated in accordance with NI 43-101, as required by Canadian securities regulatory authorities. For United States reporting purposes, SEC Industry Guide 7 under the United States Securities Exchange Act of 1934, as amended, as interpreted by Staff of the SEC, applies different standards in order to classify mineralization as a reserve. As a result, the definition of “probable reserves” used in NI 43-101 differs from the definition in the SEC Industry Guide 7. Under SEC standards, mineralization may not be classified as a “reserve” unless the determination has been made that the mineralization could be economically and legally produced or extracted at the time the reserve determination is made. Among other things, all necessary permits would be required to be in hand or issuance imminent in order to classify mineralized material as reserves under the SEC standards. Accordingly, mineral reserve estimates contained in this presentation may not qualify as “reserves” under SEC standards. In addition, this presentation uses the terms “indicated resources” and “inferred resources” to comply with the reporting standards in Canada. The Company advises United States investors that while those terms are recognized and required by Canadian regulations, the SEC does not recognize them. United States investors are cautioned not to assume that any part or all of the mineral deposits in these categories will ever be converted into mineral reserves. Further, “inferred resources” have a great amount of uncertainty as to their existence and as to whether they can be mined legally or economically. Therefore, United States investors are also cautioned not to assume that all or any part of the “inferred resources” exist. In accordance with Canadian securities laws, estimates of “inferred resources” cannot form the basis of feasibility or other economic studies. It cannot be assumed that all or any part of “indicated resources” or “inferred resources” will ever be upgraded to a higher category or are economically or legally mineable. In addition, disclosure of “contained ounces” is permitted disclosure under Canadian securities laws; however, the SEC only permits issuers to report mineralization as in place tonnage and grade without reference to unit measures. NI 43-101 also permits the inclusion of disclosure regarding the potential quantity and grade, expressed as ranges, of a target for further exploration provided that the disclosure (i) states with equal prominence that the potential quantity and grade is conceptual in nature, that there has been insufficient exploration to define a mineral resource and that it is uncertain if further exploration will result in the target being delineated as a mineral resources, and (ii) states the basis on which the disclosed potential quantity and grade has been determined. Disclosure regarding exploration potential has been included in this presentation. United States investors are cautioned that disclosure of such exploration potential is conceptual in nature by definition and there is no assurance that exploration will result in any category of NI 43-101 mineral resources being identified. 33
  34. 34. Footnotes 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. Based on 365 days per year. “Gold equivalent ounces” include revenue from silver converted to a gold equivalent based on estimated average realized commodity prices ($1,410 per ounce; an average silver price of $6.77 per ounce (calculated using the silver agreement contract price of $4.14 per ounce and assuming excess silver beyond contract requirements is sold at an average silver price of $21.16 per ounce)). Cash cost is a non-GAAP measure. Refer to the third quarter 2013 MD&A for a reconciliation of cash costs. Refer to third quarter 2013 MD&A for adjustments. Silver production is subject to a silver purchase agreement. Refer to the third quarter 2013 MD&A for details. “Gold equivalent ounces” include silver and copper production converted to a gold equivalent based on consensus estimated commodity prices; accounts for the San Dimas silver purchase agreement; and uses Cerro Resources publically disclosed production estimates delayed by 18 months. Assumes 100% ownership of Cerro Del Gallo and that it begins production at the end of 2015, with full year production estimated at 95,000AuEq. oz in 2016, anticipated production increase is over 2015 estimated production increase from San Dimas. Estimated five-year annual average after-tax operating cash flow assuming San Dimas expansion to 2,500 tpd starting in Q1 2014 estimated at metals prices in dollars per ounce for gold and silver of 2013: 1,400/25.00, 2014:1,300/21.43, 2015 and beyond: 1,200/21.43, including recent tax reforms in Mexico. Goldcorp: 5 year, 6% note with annual principal payments of $5M plus 50% of Excess Free Cash Flow, with balloon payment of balance at end of 2015. Industry average based on all-in sustaining cost comparison published by TD Securities July 18, 2013. See October 15, 2012 News Release “Primero Announces Expansion of its San Dimas Mine” for details. As estimated by Cerro Resources using gold, silver and copper price of US$1,341/oz, US$25.58/oz and US$7,582/t (or $3.44/lb) respectively. See Cerro Resources Phase I Definitive Feasibility Study as of May 2012 filed on SEDAR by Primero on April 1, 2013. Based on Cerro Resources Phase I Definitive Feasibility Study as of May 2012 and filed on SEDAR by Primero on April 1, 2013. and preliminary capital expenditure estimates calculated internally by Primero as of May 2013. The Cerro del Gallo mine is subject to a 4% Net Smelter Return (NSR) royalty. Cerro Resources Phase I Definitive Feasibility Study as of May 2012 as filed on SEDAR by Primero on April 1, 2013. 34
  35. 35. PRIMERO MINING CORP. 20 Queen Street West, Suite 2301 Toronto, ON M5H 3R3 T 416 814 3160 F 416 814 3170 TF 877 619 3160 Tamara Brown Vice President, Investor Relations T 416 814 3168 Trading Symbols Common Shares TSX:P, NYSE:PPP, ASX:PPM Warrants TSX:P.WT